Treasury Yields Fall to Record Lows on Europe Worries, Stocks Fall

(Bond Market Recap for July 23rd, 2012) Treasuries prices surged as investors sought refuge in safe-haven assets, pushing down yields of five-, 10- and 30-year Treasuries to fresh all time lows over reports in German media over the weekend that Greece’s failure to meet fiscal targets may result in suspension of further aid by the International Monetary Fund. The IMF however dismissed the reports as it prepares to initiate discussions with the new Greek Government.

The yield on 10-year Spanish debts crossed 7.5 percent over news that after Valencia, Murcia is planning to seek assistance from Madrid. US 10-year yields plunged to fresh new lows as global money continues to flood the US. Yield on the benchmark 10-year Treasuries dropped two basis points to 1.44 percent in late afternoon trading, New York time. 30-year bond yield fell four basis points to 2.51 percent.

10 Year US Treasury Yield – 1 Month Chart

Bond funds were also up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 73 cents, or 0.56 percent, to end at $130.79 while the Vanguard Total Bond Market ETF (BND) gained 4 cents, or 0.05 percent to finish at $85.20.

TLT 1 Month Chart

US stocks pared losses after sinking earlier on Monday, but all the three indexes closed lower over worries that Spain may require a full-blown bailout, fueling a sell out and boosting the US dollar. The Dow Jones Industrial Average (DJIA) finished at 12,721.46, off 101.11, or 0.8 percent after crashing nearly 240 points in early trading. Within the blue-chip index, 24 of the 30 components slipped with Kraft Foods (KFT), McDonald’s (MCD) and Microsoft Corp (MSFT) all losing more than two percent on the day.

Dow Jones Industrial Average – 1 Month Chart

The S&P 500 Index (SPX) fell 12.14 points, or 0.9 percent, to 1350.52, bouncing off from the day’s low of 1337.56, with consumer-discretionary and materials dropping the highest. All the 10 sectors within the S&P closed lower.
The NASDAQ Composite Index (COMP) slipped 35.15 points, or 1.2 percent, to close at 2890.15.

For every three stocks declining, one advanced on the NYSE.

Oil prices for September delivery dropped $3.76 to close at $88.14 a barrel.

Gold futures for August delivery lost $7 to close at $1,577.40 an ounce.